Australian investors are a forgiving lot; at times.
I suppose it all depends on which company is transgressing. If it's Coles, then it's raspberries all round, or in the case of AGL Energy, a sell off and a sharpening of axes around senior management.
And if you are Woodside Petroleum, with oil prices running at near record levels around the world and with a history last year of promising much and not delivering, what would investors do if you reverted to that 2006 form?
Sell, as they did yesterday morning after Woodside revealed a sharpish downgrade in its expected production this year.
But it was the first this year, after two last year, when oil prices also reached a series of records.
For the first half of 2007 WPL had been doing well, meeting targets and investor expectations.
But yesterday the third quarter report contained the news that third-quarter output fell 8% compared to the same period of 2006.
Production fell to 17.6 million barrels, down 8% from a year earlier, after the sale of the company's stake in the Legendre field and a 69% slump in the just sold Chinguetti field.
And, it cut its 2007 forecast by around 10%, to between 70-71 million barrels of oil equivalent (boe), from the initial estimate of 72-78 million boe.
That's was because of the Legendre sale in March and the disposal of its troubled Mauritania assets in West Africa last month for around $500 million in total.
Third quarter oil and gas production of 17.6 million boe though was up 4% on the June quarter because of higher output from the Enfield oil project and the onshore Northwest Shelf gas plant in Western Australia.
And when investors looked at these and other production numbers, it seems they came to the conclusion that the 'downgrade' was more an adjustment caused by the changed production profile.
So the shares which had fallen from $53.90 at the opening to a low of $52.58, bounced by the afternoon into positive territory, driven past $55 by sentiment churned up by oil reaching an all time high of $US89 a barrel in New York. The shares closed up $1.32 at $55.50.
Oil remains above $US87 a barrel. Woodside shares hit record $56.66 Wednesday.
But while that sounds impressive, Woodside is not getting much, if any benefit, unlike 2006. The reason is the strong Aussie dollar which has bounced around, under and above 89 USc for the past day or so.
The stronger dollar is clipping Woodside's revenues on conversion from US to local currency.
This shows up in the sales revenue for the June-Sept quarter of $964 million. That was down 16% from the September quarter of 2006, despite higher prices a year ago, and that 8% dip in production.
Third quarter revenue was also $5 million under the June quarter figure of $969 million, but production was up 4% in the September 3 months. That's the higher dollar at work.
Revenue for the first 9 months was up by $120 million at $2.833 billion, compared to the $2.712 billion for the first 9 months of 2006, but exploration and development costs jumped by almost a third to $2 billion, from $1.549 billion, meaning WPL faces a compression of earnings, especially with production this quarter to be lower and the higher Aussie dollar.
Besides the Chinguetti sale to Petronas of Malaysia, Woodside says production will be curtailed by lower output from the Corallina field in the Timor Sea which was shut at the end of last month for repairs expected to take three to six months.
And output from the much delayed Otway gas project in Bass Strait, has finally started, but won't stabilize until January. Production from the Neptune project in the Gulf of Mexico may now be delayed until early next year as well.
Offsetting this is the improvement from Enfield, which was the source of some of the downgrades last year along with Chinguetti.
"Improved Enfield oil production: a major producing well, ENA-03L, was returned to production in late September. The ENA-03L well is currently producing at around 7,000 bbl per day, and will remain choked back until the supporting water injector (ENC-04) comes on line in November 2007.
"At the time of this report the field was producing at around 55,000 bbl per day and should increase once pressure support from the new water injector is established," Woodside said.
